New income tax rates on capital gains from the sale of assets and rights will only be valid from January 1, 2017

Interpretative Declaratory Act No. 29.04.2016, of April 3, 27, was published on April 2016, 13.259, through which the Federal Revenue Service recognized that the new Income Tax rates levied on capital gains, established by Law No. 2016/1, will only take effect from January 2017, XNUMX, in compliance with the constitutional principle of prior notice.

Therefore, throughout 2016, tax on capital gains earned by individuals and legal entities will continue to be collected at a rate of 15%. However, starting next year, the 15% rate will be applied to capital gains that do not exceed BRL 5.000.000,00 (five million reais), the 17,5% rate if the gain is greater than BRL 5.000.000,00 (five million reais) and does not exceed BRL 10.000.000,00 (ten million reais), the 20% rate if the gain is greater than BRL 10.000.000,00 (ten million reais) and does not exceed BRL 30.000.000,00 (thirty million reais), and finally the 22,5% rate on gains that exceed BRL 30.000.000,00 (thirty million reais).1

These scenarios can be summarized as follows:

Capital Gain Until 31.12.2016 From 01.01.2017
Up to BRL 5.000.000,00 15% 15%
Exceeding BRL 5.000.000,00 reais, not exceeding BRL 10.000.000,00 17.5%
Greater than BRL 10.000.000,00, not exceeding BRL 30.000.000,00 20%
Greater than BRL 30.000.000,00 22.5%

1 In addition to individuals, the new rates apply to capital gains earned by legal entities as a result of the sale of goods and rights to non-current assets, except for legal entities taxed based on real, presumed or arbitrated profit.

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